When AVAX peaked in 2021, it rose as high as $145.
Avalanche, the fourth-generation proof-of-stake (PoS) blockchain, incurs significant costs to incentivize its validators.
Token Terminal data from December 7 shows that last year, the smart contract platform paid more than $275 million in AVAX to compensate its validators despite generating only $11.5 million in user fees.
Avalanche Is Paying a Premium to Incentivize Validators
While it appears that Avalanche is paying a premium for validators, this is critical to securing the network and ensuring all transactions are confirmed. In general, and being a proof-of-stake network that depends on node operators for its security and decentralization,
Avalanche’s decision to pay a premium to validators is, as its users demand, to maintain a solid network of nodes. According to data from CoinMarketCap, the network has a market capitalization of more than $9.8 billion. It is currently in the top 10 for liquidity, surpassing Polygon and Polkadot, which compete with low-fee alternatives.
As it is, by incentivizing validators with generous rewards, Avalanche ensures that there is a solid pool of nodes available to keep the network running. Through these validators, AVAX holders can stake and receive rewards.
As of December 7, there are over 1,539 validators currently staking over 248 million AVAX and earning an APY of 7.84%. At the same time, statistics show that the Avalanche has a participation rate of 57.11%. Most of AVAX in circulation are used to protect the network at this level.
While AVAX’s incentive may attract more validators, Avalanche’s documentation also states that the network does not require complex hardware to operate a node.
At the same time, the blockchain, unlike Ethereum, states that staked AVAX is not at risk of being shorted (or penalized by the network) as long as all network requirements are met. This feature could explain the constant increase in the number of validators over the last three years.
The Advantage of Avalanche Blockchain
Avalanche blockchain offers unique features such as incredible transaction speeds, customization, and a nearly infinitely scalable architecture. Its subnetwork model provides unparalleled options and composability for blockchain builders and networks. This makes Avalanche an ideal choice for the IEEE accreditation system, where transparency, security and efficiency are paramount.
The collaboration between IEEE and Zupple Labs marks the beginning of a transformative journey. Hundreds of thousands of credentials will be issued to Indian users on the Avalanche blockchain, ensuring its tamper-proof nature. Zupple Labs brings expertise, facilitating the seamless integration of blockchain technology into IEEE accreditation processes. Zupple is a cutting-edge software company with expertise in blockchain, decentralized platforms and cloud computing, enabling users to create customer-centric applications that promote digital automation.
AVAX Has Risen 200% and is Trading at the High of 2023
While Avalanche increases its number of validators, AVAX prices have also expanded steadily, mirroring the overall market. So far, AVAX is trading above $26, up more than 200% in the last three months. At spot exchange rates, AVAX is trading at new 2023 highs and in a bullish breakout formation, watching the price action on the daily chart.
Apollo Crypto predicts a Bitcoin price of $200,000 this cycle. Looking at how AVAX is doing, the bulls could break above $30. If the accompanying surge comes with expanding trading volume, it could be the basis for another push that could lift the coin towards $90 or higher in the coming sessions.
By Audy Castaneda